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Press Release on the Report on Payment systems 2011

Promoting the smooth operation of payment systems is one of the main functions of Banco de Portugal (1). Efficient and reliable payment systems are essential for economic and financial transactions, monetary policy implementation and financial system stability.

The Report published today presents a detailed description of work undertaken by Banco de Portugal in the performance of its functions as regulator and oversight authority, as operator and supplier of settlement services in central bank money and as catalyst and promoter of the efficiency and development of payment systems.

Significant developments at European level

2011 was marked by significant developments at European level, with an impact on the current and future framework of payment and settlement systems.

As oversight authority, Banco de Portugal has followed the work of the Committee on Payment and Settlement Systems (CPSS) and the technical committee of the International Organization of Securities Commissions (IOSCO) in revising, harmonising and strengthening oversight standards applicable to financial market infrastructures. The Bank has also monitored developments in the preparation of European legislation on Central Counterparties (European Market Infrastructure Regulation – EMIR) and Central Securities Depositories (Central Securities Depository Regulation – CSDR).

Banco de Portugal’s participation in the Eurosystem has involved monitoring progress made in the T2S project (TARGET2-Securities) (2), especially the finalisation of the Framework Agreement among major participants, national central banks and Central Securities Depositories (CSD), and studies regarding the feasibility and implementation of T2S in the different countries, including Portugal. By the end of June 2012, 24 European CSDs had signed the Framework Agreement (3).

Banco de Portugal has contributed to the implementation of the European project to set up the Single Euro Payments Area (SEPA), promoting the necessary discussions with main national and European players.

The aim of SEPA is to enable cashless payments to be made throughout the euro area from a single account located in any of its countries, and to provide a harmonised set of settlement services (SEPA-compliant credit transfers, direct debits and cards).

In Portugal, bank customers have been able to carry out SEPA credit transfers since 28 January 2008 and SEPA direct debits since 1 November 2010.

The deadline set, of 1 February 2014, for the migration of credit transfers and direct debits to SEPA format, as laid down in Regulation 260/2012 of the European Parliament and of the Council, is expected to accelerate the process significantly. The Portuguese community must make its best efforts to ensure timely and gradual transition, minimising the operational risks and possible negative spillovers to system credibility.

Main data

In 2011, the interbank settlement system in Portugal (TARGET2-PT)(4) operated smoothly. This system was developed in order to serve the needs of the single monetary policy, contributing to the integration and stability of financial markets in the euro area. The system ensures safe and efficient real-time operation of payments in euro, particularly related to monetary policy operations.

1.59 million operations were processed through TARGET2-PT (+0.6 per cent versus 2010), totalling €7.1 billion (5) (+7.6 per cent). This is a historical peak since its start of operation in 1999, the first TARGET generation, and is equivalent to approximately 44 times the value of the Portuguese GDP in 2011. Hence, a value equivalent to the Portuguese GDP was processed through TARGET2-PT every six days.

Growth in value is largely due to an increase in the amounts of monetary policy operations involving Banco de Portugal and financial institutions.

SICOI(6), which processes retail operations, has also operated smoothly.

2,006 million operations were processed through SICOI (+3.5 per cent versus 2010), worth around €344 billion (-0.8 per cent) – see Table 1.

Electronic payment instruments (direct debits, credit transfers and card operations processed through the Multibanco network) have had positive growth rates and have gradually replaced paper-based instruments (cheques and bills of exchange).

Table 1 |TOTAL TRANSACTIONS IN SICOI | Volume in millions and value in EUR billions

20102011Change (%)
Total1 937,3346,62 005,8343,83,5-0,8
Bills of exchange0,21,50,21,4-15,2-8,8
Credit transfers86,4 119,2102,5130,318,79,3<br />
Direct debits121,215,7127,816,95,48,2
Multibanco1 633,886,61 695,688,53,82,3

In 2011, is spite of a sustained decrease in the use of cheques, 79.7 million cheques were processed through SICOI, totalling €106.7 billion (daily average of 320 thousand cheques, totalling €428.3 million).

0.8 per cent of the total cheques submitted in 2011 were returned (0.7 per cent in 2010). However, in absolute terms, returns declined from 676,000 in 2010, to 636,000 in 2011 (-5.9 per cent). Most returns continued to be due to ‘lack of or insufficient funds’ (473,000 returns, -3.5 per cent versus 2010).

In 2010 Multibanco network processed daily 4.6 million transactions with a financial impact (7), totalling €243 billion. The most processed types of transactions were: purchases (42.6 per cent of the total volume of transactions), national withdrawals (8) (24.3 per cent) and low-value payments (9) (17.0 per cent). Vis-à-vis 2010, there was a sharp increase in purchases in Portugal with foreign cards (+13.1 per cent in volume and +12.3 per cent in value) and in purchases abroad with Portuguese cards (+12.4 per cent in volume and +5.8 per cent in value).

Lisbon, 25 July 2012
(1) It shall be incumbent on the Bank to regulate, oversee and promote the smooth operation of payment systems (Organic Law, Chapter IV, Article 14).

(2) The purpose of the T2S project is the construction of an integrated technical platform to provide securities settlement services, in central bank money, to Central Securities Depositories and, through these, to final users.

(3) E.g. Interbolsa, the Portuguese CSD.

(4) Trans-european Automated Real-time Gross settlement Express Transfer-system.

(5) € 1 billion = € 10^12.

(6) Interbank Clearing System. This system is designed for clearing payments under €100,000, carried out with cheques, bills of exchange, direct debits, credit transfers, and bank cards.

(7) Cash withdrawals and deposits and payment operations.

(8) Withdrawals in ATMs in the national territory with cards issued by resident credit institutions.

(9) Includes payments at motorway tolls and car parks.